New data reveals that self-referring urologists detected cancer at a far lower rate—57% lower than non self-referring urologists, suggesting that those providers with a financial self interest performed prostate biopsies on men who were significantly less likely to have cancer, said Georgetown University healthcare economist Jean M. Mitchell, PhD, today at a panel discussion on cancer costs in Washington, DC.

Because of these financial incentives, Dr. Mitchell calls for Congress to remove anatomic pathology (AP) services from the in-office ancillary services (IOAS) exception to the Stark law, a position supported by the CAP. “If we’re really concerned about controlling healthcare spending, I think going after the IOAS exception is a good first step,” she said at the panel discussion sponsored by Health Affairs, a leading healthcare policy journal where her study appears this month. The CAP co-funded Dr. Mitchell’s study.

Overutilization, Less Detection

Dr. Mitchell has long cast a critical eye on self-referral arrangements. Her research on physician self-referral in the early 1990s led to the passing of a federal law—Stark II—curbing such business arrangements. However, certain ancillary services, including in-sourcing of pathology services, were exempted from the self-referral prohibitions under that law.

The impact of self-referral on ancillary services hasn’t been investigated extensively—or at all, in the case of pathology services until Mitchell’s study. Overutilization related to diagnostic imaging and intensity-modulated radiotherapy (IMRT) for prostate cancer was also the focus of the panel discussion. But as Dr. Mitchell explained, her study provides the first clear evidence that self-referral of pathology services leads to overutilization, as well as increased costs. In addition to her findings on cancer detection, she found that self-referring urologists billed 72% more to Medicare for 4.3 more pathology services (or jars) per biopsy than non self-referring urologists.

Nevertheless, a lobbyist who represents urologists the Large Urology Group Practice Association challenged Dr. Mitchell, stating that the self-referring providers were complying with National Comprehensive Cancer Network’s guidelines on Prostate Cancer Early Detection in submitting 10 to 12 tissue samples (or cores) per prostate biopsy procedure.

While that may be true, it’s clear from Dr. Mitchell’s findings that more specimens (at an increased cost to Medicare), do not translate into more cancer found. “Even after adjusting for other confounding factors, my research found the likelihood of cancer detection was 57% higher if you were treated by a non self-referring urologist,” she explained. “Self-referring urologists were performing biopsies on men less likely to have cancer.”

Energy & Commerce Committee Criticizes FDA’s RUO/IUO Draft Guidance

House leaders on the Energy and Commerce Committee are speaking out against FDA’s draft guidance on in vitro diagnostics (IVD) labeled for research use only (RUO) or investigational use only (IUO), expressing concern that it appears to disregard the current regulatory definition of “intended use”.

The draft guidance indicates that “actual use” will now be a factor in FDA’s analysis of intended use, which is in conflict with the Federal Food, Drug, and Cosmetic Act, stated E&C Chairman of Health Subcommittee Joseph R. Pitts (R-PA) and Subcommittee Vice-Chairman Michael C. Burgess (R-TX) in a letter to FDA Commissioner Margaret A. Hamburg, MD.

The CAP’s comments on the FDA’s draft guidance, “Commercially Distributed In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only: Frequently Asked Questions,” are online.

Lawmakers are also concerned that the draft guidance requires IVD manufacturers to perform surveillance of their products’ end users and halt sales if their produce use goes beyond research.

The College is also concerned about this issue. The draft guidance makes reagent manufacturers responsible for evaluating the activities of their customers, CAP Board of Governor Paul Valenstein, MD, told Statline last June. This is ill-advised, adding that in the pharmaceutical world, drug companies are not held accountable for off-label use of medications by physicians, provided that the companies do not promote off-label use.

The Committee requested agency response to these and other concerns by April 9. Statline contacted the FDA for comment about the status and details of a response, but received no reply by press time.

CMS Names 27 ACO Participants for April Launch

This week CMS announced the 27 accountable care organizations (ACO) that will be the initial participants in the Medicare Shared Savings Program, one of the most high-profile efforts in the healthcare law to overhaul delivery and coordinate care. Since the Shared Savings Program isn’t entwined with the most controversial elements of the reform law, such as the insurance mandate, it will likely remain regardless of the Supreme Court’s decision.

The 27 entities were slated for an April 1 launch. Two of the selected ACOs are participating in the two-sided risk model, which entitles them to share in the savings and losses throughout the program’s three years. Five of the ACOs will participate in the Advanced Payment Model. These entities will receive advance payments to help cover start-up costs; the payments will be repaid from shared savings earned by the ACO.

With over half physician-led entities, these initial ACOs will include more than 10,000 physicians, 10 hospitals, and 13 smaller physician-led entities, serving an estimated 375,000 beneficiaries. Moving forward, CMS is currently reviewing 150 participant applications for the next start date, July 1.

MedPAC Takes Aim at Overvalued PFS Services

The Medicare Payment Advisory Commission (MedPAC) is recommending that the physician fee schedule (PFS) be refined by reducing the relative value units (RVUs) of overvalued services in its most recent report to Congress. The group, which advises Congress on issues affecting the Medicare program, is also recommending that the flawed sustainable growth rate (SGR) formula be repealed and replaced by a 10 year combination of freezes and updates.

In addition to identifying potentially overvalued services on the PFS, MedPAC is also recommending in its March 15 report that data be regularly collected to evaluate the adequacy of Medicare’s fees for efficient care delivery and to establish more accurate work and practice expense RVUs. Any reductions in RVUs are to be budget neutral within the fee schedule.

It’s important to note that the American Medical Association’s (AMA) Relative Value Update Society (RUC) continues to be very active in identifying misvalued services. Indeed, the AMA estimates that RVU changes for 2011 led to a redistribution of payments close to 1.2% of total allowed charges. This is in line with MedPAC’s annual goal of achieving a reduction in RVUs that would redistribute payments of at least 1% of total allowed charges, beginning in 2015.

SGR Overhaul

Similar to the CAP and other physician groups, MedPAC is critical of the current Medicare physician payment system under the current flawed SGR formula. MedPAC’s most recent report calls for the SGR to be repealed and replaced with a 10-year schedule of PFS updates. The commission proposes a freeze in current payment levels for primary care and, for all other services (including pathology), annual payment reductions of 5.9% for three years, followed by a freeze in the conversion factor for the subsequent seven years.

Also as outlined in previous reports, MedPAC recommends new payment models encouraging providers to work together to coordinate care. To this end, MedPAC recommends increasing shared savings opportunities for physicians and health professionals who join or lead two-sided risk accountable care organizations (ACOs). As ACO models develop and make strides in improving quality and efficiency, the volume-based fee-for-service environment should increasingly become less attractive for providers, according to MedPAC.

CAP Continues Pressing CMS to Suspend Palmetto’s MolDx Program

The College is persisting in its calls for CMS to suspend its Palmetto Molecular Diagnostic program. In a March meeting with CMS officials, College leaders explained that despite recent revisions to the program, there remains concern that Palmetto’s coding requirements violate the Health Insurance Portability and Accountability Act (HIPAA), including misapplication of the local coverage determination (LCD) process.

In early February, CMS officials announced significant changes to the program, including delaying the program start day from March 5 to May 1, 2012. In addition, Palmetto announced it would offer its own identifier for MolDx test submissions. This identifier, the Palmetto Test Indicator (PTI), is an alternative to the McKesson Z-codes initially required.

After these adjustments, CMS officials reached out to CAP for feedback. In response, College leaders outlined their continued concerns, particularly related to HIPAA compliance, during the March meeting.

“The fact that the MolDx Program and the Revised MolDx Program violate HIPAA remains the CAP’s key area of concern,” wrote Jonathan L. Myles, MD, FCAP, in a March 27 letter to CMS Acting Administrator Marilyn B. Tavenner. “If a provider desires to file an electronic health care claim, a health plan must accept such a transaction that is filed in HIPAA standard format. Furthermore, only HIPAA-approved code sets may be required by a plan in connection with electronic health care claims.” Dr. Myles, who is Chair of the CAP Economic Affairs Committee, joined other College members in a March 28 conference call with Deputy Administrator and Director for the Center for Medicare Jonathan Blum.

CMS officials have said they are reviewing these issues, and will provide a response in the next several weeks. Watch for updates in future issues of Statline.

Connecticut Genetic Counselor Bill Stalled in Committee

Legislation introduced in Connecticut requiring physicians to be certified by the American Board of Genetic Counseling (ABGC) in order to supervise a genetic counselor will not move forward during this legislative session.

The CAP and the Connecticut Society of Pathologists (CSP) worked with the Connecticut State Medical Society to express opposition to SB 370, unless it was amended to remove the certification requirement. Recently, the College learned that this bill is not expected to move out of the Joint Committee on Public Health.

In a March 15 letter opposing the bill, CSP President William G. Frederick, MD, PhD, explained that requiring a supervising genetic counselor (physicians) to obtain a certification from (ABGC) to supervise a genetic counselor would be unnecessary and an excessively restrictive requirement for physicians. “We believe it is unprecedented for a state law to require certification by a licensed physician to supervise an allied health professional in providing these services,” Dr. Frederick wrote in the letter to state Rep. Elizabeth B. Ritter, the committee co-chair.

Congressman Price (R-GA) To Address CAP Policy Meeting Attendees

Rep. Tom Price, MD (R-GA) will be a keynote speaker at this year’s CAP Policy Meeting, which will be held in Washington, DC, on May 7-9, 2012. Congressman Price is a member of the House Ways and Means and Budget Committees.

Also speaking at the meeting will be former White House Special Advisor for Health Policy Ezekiel J. Emanuel, MD, PhD. , who is now with the University of Pennsylvania, where he serves as the Vice Provost for Global Initiatives and Chair of the Department of Medical Ethics and Health Policy.

Other confirmed speakers include: Jodi Daniel, JD, Office of the National Coordinator for Health Information Technology and Amy Showalter of The Showalter Group. They will be joined by key CAP physician leaders including Stanley J. Robboy, MD, FCAP, Richard C. Friedberg, MD, PhD, FCAP, and Paul N. Valenstein, MD, FCAP.

A members-only event, the CAP Policy Meeting offers the opportunity to engage and discuss key health policy issues that impact the specialty of pathology with key CAP leaders, health care policy decision makers, and colleagues. The CAP will provide up to 7.5 hours of continuing medical education for physicians participating in this event. Stay tuned to Statline for further updates; visit the meeting website to register and for more details.

Keep Up with the Latest CAP Advocacy News on Twitter

CAP Advocacy is now on Twitter. Follow CAP Advocacy’s daily “tweets” to keep pace with regulatory and legislative news affecting pathology. For the latest health care news, be sure to check out what we are following on Twitter.